Intra-bank rate again up to 7 pc

Nepal´s money market liquidity that chiefly represents cash held by banks for immediate investment remained tight on Thursday, thus pushing the intra-bank rate up to seven percent, 1.5 percentage point more than the rate seen on Wednesday.

A banker told myrepublica that the liquidity shortage that emerged lately, however, is a short-term phenomenon but is likely to remain throughout the coming week. The market, which was already running tight since the past six weeks, experienced a new wave of liquidity shortage after huge amount of cash collected while issuing primary shares was deposited to the central bank, the banker added.

Last week, Kasthamandup Development Bank issued 9.6 million units of ordinary shares that attracted subscriptions worth around Rs 5 billion -- 50 times more than offered. As per the mandatory provision, all the cash collected while issuing primary shares will have to be deposited at the central bank for at least five days within six days of the closure of public offer.

The intra-bank rate, a barometer to gauge status of cash liquidity in the market, eased down Tuesday after the central bank injected additional Rs 3 billion, taking the total injection made by the central bank in the last 15 days to Rs 8 billion. Before the injection, the inter-bank rate was in the range of 8.75 percent to 9 percent.
Source: